Granholm urges invest for change

LANSING -- Gov. Jennifer Granholm on Tuesday painted a vision of a state where alternative energy companies employ tens of thousands of workers, low-income students attend new high schools that prepare them for college and residents laid off from manufacturing jobs find bright new futures in health care.

The Democratic governor said those are the ways Michigan will grow out of its protracted economic crisis, which has saddled it with the nation's highest unemployment rate and caused people to leave the state for better opportunities elsewhere.

AP PhotoGov. Jennifer Granholm delivers her State of the State address Tuesday in Lansing.

"The world is changing at a rate unimaginable just a decade ago. No state has borne the brunt of that change like Michigan," Granholm said during her sixth annual State of the State address. "Our commitment to diversifying our economy and educating our citizens must be strong and unwavering because, my friends, there simply is no other course."

Falling interest rates mean Granholm will be able to create a pool of money for one-time investments by refinancing some of the state's debt.

She plans to tap that for new business credits, tourism promotion, and construction and road projects.

Granholm promised in December not to raise taxes this year after last year's increase in the state income tax and a surcharge on the state's new business tax.

Still, the extra money -- and lower interest rates -- did give the governor a little breathing room that she hasn't had during the first five years of her governorship, when shrinking revenues meant every January brought a new budget deficit.

She planned to spend $7.5 million on a new state police trooper school to train 100 new troopers, and pledged $50 million to promote Michigan to business leaders and tourists. She also planned to offer a new tax incentive to businesses in the nation's 50-fastest growing industries that hire new Michigan workers.

Granholm also proposed an economic stimulus package of nearly $1 billion for infrastructure and building improvements, providing about 28,000 construction and other jobs over the next two years. And she said she wanted to tap state pension funds to create a fund of at least $300 million that the state could use over the next three years to make capital available to businesses adding Michigan jobs.

Highlights of Granholm's speech

ECONOMY:
• Sees Michigan as a future leader in alternative energy including wind power, ethanol and fuel from wood waste. Michigan can create jobs by expanding its businesses dealing with materials used in solar panels, wind turbines and alternative-fuel cars.

• Proposed setting aside money that could be tapped to offer low-interest loans of up to $4 million to lure new companies to the state. The Michigan Invests! Fund would be designed for young companies that want to grow in Michigan. At least $300 million would be set aside for the fund from state pension funds.

• Proposed an economic stimulus package of nearly $1 billion for infrastructure and building improvements, providing about 28,000 construction and other jobs over the next two years. The package would be paid for by refinancing debt to take advantage of lower interest rates.

• Proposed the Michigan Job Creation Tax Credit for companies in the nation's 50-fastest growing industries. The program is designed to give companies tax credits for up to four years for hiring Michigan workers.

• Proposed expanding the No Worker Left Behind program by spending $40 million in state dollars to offer free community college tuition to retrain laid-off workers.

• Called for the Senate to follow the House and pass bills allowing homeowners struggling to meet their mortgage payments to get fixed, low-rate loans through the Michigan State Housing Development Authority. The agency would sell tax-exempt bonds to finance the loans.

• Proposed increasing incentives to spur the growth of the film industry in Michigan.

• Said she plans to appoint an advocate for insurance customers.

EDUCATION:
• Called for creating up to 100 small high schools with no more than 400 students each. The expansion of an existing pilot project would be funded by $300 million raised by borrowing against future school aid revenue. The money would last three to five years. Granholm wants some of the schools opened by late 2009.

• Asked lawmakers to pass legislation requiring teenagers to stay in school until age 18 rather than 16 and making kindergarten mandatory. She also urged having all-day kindergarten.

• Proposed taking some of the money raised through property taxes to match private donations so school districts can copy Kalamazoo's free college tuition plan. Granholm made a similar proposal last year.

• Said she will propose a budget for next fiscal year that increases investment in K-12 schools and expand early childhood education.

ENERGY AND ENVIRONMENT:
• Wants more work on legislation to protect the Great Lakes from water diversion.

• Wants 10 percent of electrical energy to come from renewable sources by 2015. That would increase to 25 percent by 2025.

• Said utilities will make major investments in alternative energy, mostly wind energy, creating 17,000 jobs, once legislation is passed.

HEALTH CARE
• Said she will continue to push for federal help with a plan to expand coverage to the uninsured in Michigan, which so far hasn't materialized. She said that help might not come until President Bush is out of office.

LAW ENFORCEMENT:
• Proposed adding 100 new state police troopers, helping to replace some of the law enforcement personnel who have retired in recent years.

LEGAL REFORMS:
• Called for eliminating the state's unique 1995 law shielding pharmaceutical makers from product liability lawsuits over drugs such as Vioxx. The House has passed the bills; the Senate hasn't.

LEGISLATURE RELATIONS:
• Said Michigan residents are angry about the state of the economy, and that some of the anger is directed at herself and lawmakers for bickering. She called for an era of "unprecedented cooperation for historic progress" and said legislators on both sides of the aisle are already making a commitment to work together.

• Asked for lawmakers to follow the lead of state employees by making concessions in health care and benefits.

TOURISM
• Called for making a $50 million investment in marketing Michigan to tourists and business leaders.

PRISONS
• Urged savings in the state's corrections system similar to those adopted in other Midwestern states. Last year, Granholm said the state could commute sentences or shorten prison terms for inmates who pose no safety threat to the public.